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Erik Burgess, Published February 16 2014

Fargo makes threat of eminent domain

FARGO – City officials here are edging closer to using eminent domain to legally seize a home for flood control purposes – a first among the hundreds of homes acquired in the metro area since the record-high flood of 2009.

If the house is forcibly seized by court order, it will be the first time the city has done so for flood protection at least since the 1997 flood, city officials said.

Neither Cass County nor Moorhead – where buyouts have also been widespread since the 2009 flood – has used or threatened to use eminent domain for flood control in recent years.

“This is an unusual circumstance,” said Nancy Morris, an assistant city attorney in Fargo.

The home the city needs to remove is at 1118 4th St. S. and belongs to Rich Quam, who’s lived there since 1999.

A city engineer says the dike in Quam’s backyard could become structurally unstable, and that the Federal Emergency Management Agency won’t recertify that levee unless the city fixes it.

If FEMA doesn’t recertify the levee, nearly 190 nearby homeowners who previously didn’t need flood insurance would be thrown into the flood plain at a time when flood insurance rates are about to skyrocket, city officials say.

Quam, 54, said he’s put too much time and money into his home – adding a second level and a garage – and doesn’t believe the city is giving him a fair price.

“The price they gave me for it was a lot less than the materials I have (put) into the place,” he said. “And it was just more of an insult that my work wasn’t worth anything.”

The city has asked for an appraisal of the home, which is the first step in seizing the home by eminent domain, according to a letter from Morris to Quam dated Aug. 26.

In an interview Thursday, Morris said she wasn’t certain when the appraisal would be completed, but she said once it is, Fargo will attempt to negotiate with Quam one last time.

“If an agreement for the purchase is not then reached, the appraisal amount will be deposited with the court and eminent domain proceeding commenced in accordance with North Dakota law,” Morris states in her letter.

Structural problems

The city is in the process of recertifying its Fourth Street levee, which was first certified in 1998, and Quam’s home is literally standing in the way.

“We’ve identified some issues with the Fourth Street levee that we need to correct,” said Nathan Boerboom, a division engineer for Fargo.

Through geotechnical consultants, the city has found that the levee is prone to slumping and needs to be moved farther back from the river bank.

The foot of the levee needs to be about 10 feet from the current sidewalk, Boerboom said.

“The center of the levee would basically be right where the center of (Quam’s) house is today,” Boerboom said.

Boerboom said the levee is structurally sound today, and would be fine in a spring flood this year.

The neighbors on either side of Quam already accepted buyouts and left, Quam said.

The city also needs to buy three vacant lots just north of Quam’s home, and the owner of those lots received a similar notice from the city, warning him that eminent domain was a real possibility, Morris said.

The possibility of using eminent domain comes at a time when city officials are feeling the heat to certify levees so homeowners don’t have to pay sharply rising flood insurance premiums.

The U.S. Senate agreed in January to delay the steep flood insurance hikes, which were put in place by Congress less than two years ago to stabilize the federal flood insurance program and are beginning to come into effect. But the U.S. House has yet to take up the delay, which would put a four-year halt to any premium hikes while FEMA completes a flood insurance affordability study.

City Administrator Pat Zavoral said rates are already going up for 332 homeowners in the county.

“We saw one that went from $250 a year to $3,200 a year,” Zavoral said. “And it’s going to continue to increase.”

At FEMA’s existing 100-year flood plain of 38.5-feet, 475 homes in Fargo and the area immediately surrounding the city need flood insurance, according to city engineering data.

FEMA could raise the flood plain to 39.4 feet as early as this summer, a move that would boost the number of homes that need flood insurance to 2,293.

“We have to get that certified protection levee all the way around wherever there’s going to be flood insurance issues, and we have to get them done,” Zavoral said.

Unhappy with process

Overall, Quam said he was just frustrated with the way the city has approached buying his home.

He received a letter in December 2012, notifying him that his home was identified as one that the city would like to buy as part of the voluntary program, which offers homeowners 110 percent of the home’s assessed value.

Then, in February 2013, the city sent him another letter offering him $98,780 for the home. That letter states that if Quam didn’t accept, the offer would be withdrawn and his home would drop to the bottom of the buyout priority list.

The tone changed in the August letter, when Morris notified Quam that eminent domain might be used.

Quam thought the first offer was too low, so he asked for a reassessment.

Quam still has the reassessment report, and he has circled portions of it that frustrated him, like where it says he has “average oak cabinets.”

“They’re hickory,” he said. “I spent $8,000.”

The report also put his garage at $6,000 in value, but he said he spent at least $25,000 on materials.

The reassessed value was calculated to be $136,400, so the city’s offer of 110 percent of that was $150,040, Morris said.

Quam guessed he’s put $150,000 of materials alone into remodeling the home. He said Morris has called him about once a month since the August letter.

“She’ll call, and I’ll tell her the offer’s still too low,” he said.

City Assessor Ben Hushka said remodeling costs don’t necessarily translate into added market value in a dollar-for-dollar fashion.

For instance, homes are just expected to have good shingles. So if a homeowner spends a lot of money fixing shingles, they might not see a big bump when they go to sell the home, Hushka said.

Programs still voluntary

Moorhead City Engineer Bob Zimmerman said Moorhead hasn’t threatened or used eminent domain for flood mitigation, primarily because their state grants require the buyouts be voluntary. The city has bought about 230 homes for flood control since 2009.

Cass County Administrator Keith Berndt said the county hasn’t threatened or used eminent domain in buying out 106 flood-prone homes in the past five years. The county also has 24 buyouts pending and will soon apply for funding to buy another 46 homes, he said.

Zavoral said he couldn’t recall Fargo using eminent domain to seize a flood-prone home since 1997.

“You would have to make every reasonable attempt to come to some agreement to acquire voluntarily,” Zimmerman said. “Obviously, there needs to be a public purpose, and a levee certainly would be a public purpose. And from there it would go to the attorneys.”

Boerboom said Fargo has “no intentions” of changing its voluntary flood buyout program for the rest of the homes identified for buyouts. Through the end of last year, Fargo had bought about 110 homes for flood control, and it hopes to buy nearly 140 more in the next four years.

The buyouts are part of a $247 million flood mitigation program approved in 2012, and the city only has so much funding each year to complete a lengthy list of projects, Boerboom said.

“We’re perfectly fine with people turning us down throughout the voluntary acquisition process, and we’ll just proceed down the line on our list of projects,” he said.

Quam said he doesn’t want to move. From his second floor, there are windows facing east that see over the dike and offer clear views of the river. Gracie, his 2-year-old German shepherd, also enjoys being so near to nature.

But Quam said he also sees the city buying his home as inevitable.

“They have to do it,” he said. “It’s just the way they go about it that gets me.”

Readers can reach Forum reporter

Erik Burgess at (701) 241-5518